Last June, two dozen SunEdison Inc. senior managers gathered at the Park Hyatt near Paris’s Place Vendôme to hear a forecast from Chief Executive Ahmad Chatila. By 2020, he said, the renewable-energy startup would be worth more than $350 billion. Some day it would be as big as Apple or Google.

The bravado was vintage Chatila, but the fuel came straight from Wall Street. Born out of financial engineering that supercharged its growth, SunEdison had taken advantage of low interest rates and a flood of hedge-fund cash to transform...